The Trouble With Auto Leases - Lehto's Law Ep. 2.42
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- เผยแพร่เมื่อ 27 ก.ย. 2024
- Many people are confused by automobile leases and, as a result, end up getting ripped off. What you need to know - how are they different and when does it make sense to lease vs buy? There is a podcast of this video: / the-trouble-with-auto-...
www.lehtoslaw.com
@stevelehto
Back in the early 90’s; Threw a rod on the 82 cutless, local dealer picked it up, got a lease cause it was cheap and I had no money , 3yrs later, went in for the last pm, they kept it as the lease would run out in 4-days. No warning or anything, mechanic walked in with my stuff, that’s when I knew lost my ride. There I am in a dealership with no ride, personal sh*t in a plastic bag and they are trying to get me to lease another vehicle. Walked down the street to call a ride as they would not let me use the phone. Lesson learned.
So glad I have owned my truck (380,000 miles) for 18 years and don't have to mess with dealerships. My next (used) truck will be paid for in cash with the non payments I have saved.
same here..i own 4 vehicles ...they are older but who cares..no payments and paying more to drive more.
Same here, i pay cash for older decent cars, no pos, and have no payment. Only buy Toyotas or Hondas, never had issues and cheap insurance costs.
Something I learned the hard way and verified with a dealer is that to the dealer, a lease is the same as a sale. If you don't negotiate the price, they get the sticker price (which is paid by the leasing bank) and if you want to buy the car at the end of the lease, the residual value will be that much higher. So, even if you are leasing, you want to negotiate the sale price just like you are buying the car.
what I loved about leasing was knowing the car would be under warranty.
As Steve says, you have to know what you're getting into and understand the lease. As someone who never goes over miles, that's a non-issue for us. If you're someone that always wants to be in a new vehicle and find a great deal, you can surely play the system to your advantage. I leased a chevy Equinox for $900 down and $85 a month (I can't buy that car for that price), turned it in a got a Malibu for $900 down at 89 a month, again, can't buy for that price. I'm also driving a 2017 silverado 4x4 $999 down $165 a month. I'll be turning it in soon and they have a lease deal right now for $999/150 a month. I've also had a few bad leases, but all from Jeep. You have to do what works for you
Easy rule of thumb, leases, like most financial contracts, insurance, stock options, pay day lenders, credit cards, mortgage CDS’s ... were created to enrich the contract creator at the expense of the contract buyer.
That attitude ignores the benefit accrued by the borrower, who can utilize a much 'bigger' vehicle than they could buy today , to wit Upstart Shippers, Contractors, and EGO/Image demands ( it's HARD to sell million dollar properties when you show up in a beat down car and cheap suit. )
Steve forgot to tell us about the finance (interest) charges included in each monthly payment. When I turned my 24-month leased car in (with dealer approval) in 18 months, they deducted the remaining 6 months interest charges -- saving me money. Finance (interest) charges apply over the time you have the car.
Just buy a used car with cash. You can get a pretty reliable vehicle for the equivalent of just a few months of a new lease.
My parents leased a Sentra because they knew they wouldn't be driving it more that 12000 miles a year and it was cheaper. At the end of the lease Nissan had them take it to a 3rd party inspector that signed off on the car and sent it to the dealer. The dealer then tried to tell my Dad that there was damage that the inspection didn't find and my Dad simply told him "that's too bad because I have a signed statement from an independent party that Nissan selected that says that damage is on you". He didn't pay any extra.
Was the lease really cheaper than buying the exact same car and keeping it for the exact same amount of time?
Obviously I don't know the details of your parents' specific transaction, but I am sceptical. What I have found in looking at leases that other people thought were cheaper than buying, is that they are only considering monthly payments, or they don't include the value of the car at the end of the lease term.
In a traditional lease, the residual value of the vehicle has already been deducted from the cost of the car, and the car belongs to the dealer at the end of the lease, but if you purchase the car, you have an asset worth the market value of the car. That value must be deducted from expenditures on the purchased car in order to make an accurate comparison.
@@n124lp to be exact - you have rapidly depriciating asset that mb very hard to sell for numerous reasons (lets say its known now as bad model) ,so you wrong at so many points - car is not investment it only gets cheaper with a time.
Lets say you bought brand new corolla drove 10k in 10 years its gonna sell for 50% of its MSRP at best (probably about 30-35%) and for super low milage mb you will get just a couple extra bucks - now lease doesnt sound so bad?
As said in video its like buying house (wich mostly raises in price - investment) vs rent - cheaper mostly - yea ,better - depends ... what if in 2 years roof will cave in? If you rent its not your problem - you just move.
Simple: lease is cheaper if you want new car every 2 years and can pay for that habit - buying and driving it for 10+ years mostly cheaper then leas...
OP-ED: 1st. You CAN negotiate terms of lease such as milage/mos etc. 2nd. Your taxes and fees / down payment can be included in monthly payment (credit depending) ... typical $99- $2,999USD NOT $9000! 3. YOU CAN SELL or BUY your leased vehicle at anytime...if you're under miles, or early DONT PARK IT, sell it, or buy/trade it. Anything OVER the fixed buyout price is yours , including "appraisal" . 4. FINANCE WISDOM: Lease items that DEPRECIATE in value , Finance items that APPRECIATE in value. ( simple math, though most ignore it. ) *There's additional tax benefits to this. If the vehicle is for business purposes and you itemize milage, gas etc talk to a CPA who actually knows the difference and you're "fit". Besides your home, transportation is your biggest expense. In fact , over a life time, most people spend more real dollars on vehicles than their housing.
I always lease my car and NEVER make a down payment. I push for (and get) my desired monthly payment and so, for the last 20 years have driven a new car every 3 years, get all maintenance taken care of free of charge (well, as part of my lease payment), and I cannot imagine actually purchasing a car. I always read all leasing documents in detail (often to the great annoyance of the sales people handling it) and I usually manually modify any aspect of the documents that I don't agree with. The last time I did my lease the finance person was so impressed by my modifications that she gave me even more discounts than I anticipated! I always lease the same make/model of car and from the same dealership, so I get even more discounts and incentives.
I've watched about 10 full episodes. mind blown. thank for so much useful information
My wife and I did our first lease ever on her car last year.
Already there are those mileage concerns because she is now traveling for several months to a different work location (with extra pay at least for mileage.) However we went with a higher mileage limit... so still OK as long as she does not continue being reassigned the next 2 years.
At this point, she loves the car. We have the option to walk away at the end, or purchase the car for a predetermined price (at the time of leasing). As it looks she will probably buy it out at the end and keep the car. But, 2 years to go, who knows.
However the dealer probably despised all my questions. We have bought several cars off the same salesman, so he was patient with me.
I own my truck outright. Bought it cash 3 years ago as a preowned. Still driving it today. Plan to keep driving it.
My '87 Toyota is showing some signs that it's about to cross the rainbow bridge. I appreciate this video as well as your other informative car acquisition videos.
Two benefits to leasing are: a lower monthly payment for a nicer vehicle and you are always driving a car that is under warranty. Most people have a certain amount of money to spend each month and a relatively low lease payment (as opposed to a higher purchased car payment) can ease the monthly bills. I've leased about 12 vehicles from four dealerships and the only surprises I've ever had were several hundred dollars in "damage assessment". On the other hand, I've been shocked by the depreciation on every one of my purchased vehicles. Just watch the miles and you'll be fine.
Your broadcasting set up has got so much better over time xD. Watching in 2021
You can always buy the car which I have done provided the car was reliable. Then the mileage doesn't matter. I never really like the idea of being forced to do something 3 years from now. I might have something going on where I really don't want to deal with resolving a lease termination.
always ask what the residual value of the vehicle is (within mileage limitations) at the maturity of the lease! That is the projected market value (trade in value). Lease only vehicles with high residual values ie Honda Accord, Toyota Camry, Jeep Gr. Cherokee, Full size 4dr Pickups.. Vehicles that hold their value on the aftermarket. 50-60% of MSRP on a 3yr. lease is a good residual. Combine that with the cash due at signing and compare the figures to an outright buy. Never lease a vehicle knowing your NOT going to stay under the mileage limits!! With all of the zero finance deals available now, Leasing rarely makes sense financially.
I've been leasing cars since 1993. I went for the factory lease deals, usually $199 a month. I had 2 Acuras, an Isuzu Rodeo, and 3 Nissan Altimas (bought a Ford Ranger that I kept for 7 years). For all but one of those leases I was way under milage and I used that equity to cover the entire cost of the down payment. So I love leases.
Like I said above. But doesn't really exist. You finance or you lease. Either way the bank owns it. Maintenance is usually covered. I don't put any money down. When it's time to trade I go to a different car brand and they always trade in the car, even over mileage. I also do no money down leases. Try that with a finance and you owe twice the payment. I agree %100, leasing is the only way to go.
Hi Steve, new to your channel, but want to share my story on leasing. Many years ago i was at a VW dealer in north east Pa looking at a new 1986 VW GTI, red, vroom vroom, you get it. It was a second car for me , so the salesman was selling me up on the idea of leasing instead of a conventional purchase. It was a little confusing at the time because no body was willing to talk to me about the actual cost of the car in which the lease would be based on, instead they were going for old "what monthly payment would you like " line. We got past all that crap, bla bla, but my concern was at the time was what you talk about in your podcast, which is what happens to me when I exceed my 12k annual mileage limit. Even though this was a second car for me, the salesman really keyed in on my concerns or mileage overcharging and offered me a SOLUTION. Mind you, this is 1986, Feb 14th 1986, to be exact. Follow me to the car Sir, as I did. We found the new GTI a few rows back, shows me the car, pops the hood and points to an item under the hood. The item was the speedometer drive cable, which came straight out the top of the body of the trans and curved upward through the firewall and ends in the back of the speedometer head. Back then, as you know odometers were the barrel roll type, not like today. He, the salesman, reaches down and by hand unscrews the speedo cable, then telling me how beat the system by not logging mile correctly and nobody will know. He also told me how gauge my speed by using my tack. What he didn't know was , I have been in the auto repair and maintenance business for some time, now the owner of Parkway Auto Parts & Tire Inc. I was shocked to see this person showing me how to do something very illegal at a new car dealership. I did wined up leasing the car, had it for almost three years trouble free. Toward the end of the lease in 1989, I put the car up for sale with 29k actual miles. Along comes a young man to look the car over along with his father who was somewhat older than me. Not bragging, but I keep my cars very nice, it's just the way I am. This young mans father was repeatedly asking me" IS IT A GOOD CAR", I was truthful and said yes, many times. But I was made to feel that he thought I was lying. They bought the car, I paid off the lease with no issues and went on with my life. In the summer of 2010 I was in the show room of my store, just doing my thing, a man comes walking in with a little gray at the temples and asked for some help, I said sure. As I was looking at him, I knew somehow we met before, it was a awkward moment as we looked at each other, and I said, you are the guy that bought my 86 GTI, he said yeah, and we had a laugh. So I asked him if he remembered how his DAD grilled me on "is it a good car" he said he did remember that, and then said it was a good car and asked me if I wanted to buy it back, it's right outside. I was very taken back, walked outside, there it was, 309 thousand miles, some rust, and not a straight panel on it. I passed on the buy back, but it was great to see where the car started and were it wound up. Sorry for being long winded, but I do have a question. As a small business owner, could you do a podcast on what small businesses can do to protect themselves consumers that are hell bent taking advantage of just about everything. I am in a tough type of business, auto repair and tires. I know there are some real dirt bags out there that seem to be the standard yardstick of measurement, but that's not me or my company, so I was wondering what your thoughts are. Buy the way, one of my cars is 1963 Corvair Monza 900, I have the book too, everything you said in that podcast was spot on. In closing, I will leave you with one of my favorite quotes "If you're going to be dumb, you gotta be tough"
My total lease for 3 years is $5872. That's $152/month with a $400 turn-in fee, $0 down with 10k miles/year. A great deal for me compared to buying.
Dave Ramsey refers to leases as fleeces. As for homes and cars, you don’t own them, they own you.
Dave Ramsey is a conman. He is an entertainer masquerading as a financial expert. He tailors his "advice" to his audience. His audience is essentially people who have little or no actual knowledge about credit and debt and/or are in serious financial trouble due to their lack of knowledge.
I work in finance with folks who are educated about such matters. The universal opinion of Dave Ramsey is the guy is comical.
I know he does but that is an over-generalization.
@@cuzz63 im gonna take advice from a guy who is worth millions.....dave ramsey just preaches do not live beyond your means and do not go into debt with cars and credit cards...how is that being a conman....ive been able to save 50k in 4 years by his methods and looking to buy another investment property...
cuzz63 yep, the baby steps work. Proof positive. William Vann is probably one of those financial persons that says annuities are a good thing.
William Vann your a idiot
Steve I don't know how it works in your area but here you have the option to buy out the vehicle anytime during your lease. My previous car was a lease and I decided to do just that... Called the lease company and obtained the amount left to be paid ( monthly payments left plus final buyout amount ). I then sold the car for an amount close to that buyout and walked away from it.
After a 3 year lease, I refinance through my bank (a $40k car will easily refi for $20k if taken care of), then turn around and sell privately for about book at $25k, to help cover up front down payment. I love the right lease.
It’s 2021 as I watch this. Many dealers are now requiring that leases must be turned back in to them, (original dealership of lease), due to people selling to Carmax, Carvana, etc.
Very sage advice. In 2006, entered into a lease on a Nissan Infiniti M35 4 door car. NEVER again! The vehicle had all kinds of problems (mostly electrical). I was stuck with it for 3 years and couldn't get out of the lease without substantial penalties and costs. So, I made another deal. I sub-leased it! Yes, I leased it to lady without Nissan financial knowing. Worked out perfectly! She drove it, made all the payments under my name, reimbursed me for the insurance, and turned it back into me at the end of the lease; I drove it the last month and turned it into the dealership in Austin, TX just 4 miles short of the 36,000 miles allowed on the 36-month lease. After inspection, the dealer found the wheels scratched and notified me I could pay them $800 or I had 3 days to come get the car, get the wheels fixed, and return it. I contacted my sub-lease lady and she paid the $800! Voila, I was out of the lease, my credit remained perfect, and all is well. But NEVER again will I enter into a lease for a vehicle because if you have tons of mechanical or electrical problems with the car and/or truck, you can't get rid of it. Why? You don't own it; the finance company does. GREAT video and podcast on why not to lease a vehicle.
You can sell a lease car any time you want. You just have to pay the leasing company the agreed upon price. If you sell your car for more than that you pocket the extra.
"Worked out perfectly!"...You were just very lucky.
This doesn't make any sense to me. If I had a car with that many problems, first of all any dealership worth anything would 'make this right', but if they didn't, that's exactly why I would have wanted to lease it. I sure wouldn't want to own it!!! Then I'd truly be stuck. I'd be left with a crappy car that I can't see because it has had so many problems. At least you can walk away from this...and, as a matter of fact, because it was in the repair shop for so long, it probably has low miles and is worth more then the residual value...you could probably sell it for more and make money on it!
For 30 years I've thought that a lease, unless it's a business expense, is giving someone else money....buy the vehicle and keep it forever..My Subaru is 10 years old and I haven't had a payment for years,,,,I'll drive it until I die...
lease is a lease...i have rentals and it is stated in writing that if you break the lease and leave early you still owe rent until lease is up OR the unit is rented to a new tenant...whichever comes first. ..people get pissed but its right there in the lease they signed and never read..
I bought a 2003 Camry on 2004 with 27k miles. Will change it on 2023.
Here's a fun story - I leased a 2008 VW GTI it was the end of the model year in September - So I kept driving down the overall cost of the car with the salesman. Then I finally agreed to terms. I think my total mileage for 4 years was 48,000 miles. I knew I'd never hit that. The lease was written by the finance woman - she mistakenly wrote it as .05 cents per overage mile. The dealer wanted it to be .15 cents per mile over. They call me at home after I get there - saying "Hey you gotta come back and resign the lease for the .15 a mile" - I don't know Steve - But I think I had no legal obligation to do so because everyone signed. They kind of fear mongered me and I went in and signed it for the .15 a mile knowing I wasn't going to go over anyways. But I'd love to know if I was legally in the right saying I didn't have to. We know what the dealer would have said if I wanted to change terms after getting home --- "Go pound sand!"
It's always a tough question. They'd argue it was a contract formed on a mistake since you agreed to one thing and the contract reflected another. But, they drafted it (which goes against them) and, as you noted, they never would have corrected it if the error had been in their favor.
You are a better man than Me. A contract is a contract for both parties to honor.
I've never seen a car salesman's eyes light up more than when they know you want a lease. To the average consumer, leasing = fleecing.
I love getting off lease cars and trucks. Low miles and two years old. Also most well taken care of just check. The best thing most have some warranty remaining and a large amount of depreciation one was a little under half price of a new one with 18,000 miles.
So Steve when you get those Apple software updates every so often you really read all that gibberish before you click that "I Agree to terms" box ???
Great Insight Steve, Better than most crap on youtube. Need more horror stories though. keep up the god work.
Closed end one pay lease for elderly cash buyers who drive low miles is a great option.
The more I hear about what happens in US the more I get amazed. In Italy I lease a Hybrid Toyota for 3 years. No down payment. 60 K kilometers. Included in the lease I have insurance, registration, maintainance, 2 tire changes a year ( winter and summer ). I only have to provide gas. I pay per month 200 euros. I can return the car early and I do not pay a dime.
I leased a truck and it will be the last lease I’ll ever do.
Out of miles and a year left of payments. I ended up selling it to a dealership (selling to a dealership saves you from paying taxes) and paid the early termination fee & depreciation and walked away from it. Leases are headaches.
Check the lease paper work for disposal fee at end of lease. Could be $500 or more if you don't move into another vehicle.
Good tutorial Steve. Keep it up!
So my friend owns a tow company..he leases all his trucks..instead of finance..he says there is a big savings on interest taxes a liability and he doesnt take as bad of hit on his credit when he gets a new truck ..he has his lease guy figure it out to where its a 1 dollar buy back..so in essence he buys them through the leasing company.. It works for him...
My buddies dad worked for Delphi and would lease a car with minimal mileage allowed for cheap price, then install a kill switch to shut down the odometer cluster....
Back in the late eighties in Alberta leasing a car was the same as renting a car the leasing company could come and get it from you or you could return it and not have to make any more payments, and they could not come after you for the rest. How things have changed...
If they say there is damage to the car should you report that to your insurance company?
How I avoid all this financing and leasing is I paid cash for my truck. Its a 98 Z71 Silverado I paid only $700.00 from the local insurance company I then put $15 000 into it I did all the work other then the exhaust and the a/c recharge myself. I completely redid the body new motor new front end rims tires brakes list goes on. Luckly I have the skills to do this work myself. I used to buy new trucks but It got to the point now where they are way over priced and not affordable to the average person. I've bin driving said truck last few years with only a handful of small quick cheap fixes. Four five six years from now I'm sure with our Canadian winters the body will need to be redone and I will redo it and another major probley a frame off overhaul at said point and go another however many year's.
Leasing is making a 4 year loan into 7 year loan.If you have kids or dogs,the dealer will dock you big time. They want a perfect car back.
Could you touch on “gap insurance” for leases. At least in CA, the dealer will offer a policy where if there is a difference between agreed value and actual worth at end of lease, the insurance kicks in to cover the “gap”.
My husband got a Tesla, and no lease. He reads every line of a lease or purchase, and never gets in trouble. And yes, far too many people don’t read them. It’s appalling.
Is it a good idea to put bigger wheels/tires to make the odometer read less miles?
Maybe a lease is ok if you're a lawyer.
I always thought leases were so confusing. I just buy the car and forget about the nitpicking details.
A few years later I trade in the car on a new one.
Maybe I'm short a few $K but I have much less stress and no surprises.
"The large print giveth and the small print taketh away"
Love the show.
Turning in a lease early is considered a self repo in NJ
Hi Steve, great layman’s explanation for the basics of car leasing. But what happens when the car gets written off, one year into a three year lease,and your not at fault for the accident? Does the insurance company cover the balance of the lease payments, the balloon payment, since a totaled car breaks the lease, right?
Leasing is a rip-off. We leased and at the end turned in the car with no damage, under-miles. They still wanted to charge us 1k .... for the tires being worn. Four years, or about the normal life of a set of tires ... .and they had passed inspection a couple months before. But they said the car needs new tires 1K "excessive" wear.
The good thing is that this was AFTER we had bought a car at the same dealership. And still within seven days ..... I said fine. We'll bring back the car we just bought .... and we're done.
Sure I risked a lot of legal headaches, but I knew that it would cost them more financially and hugely more in aggravation than they could get out of us .... and I made it plain to them sure you can sue me and maybe you'll get a couple grand out of me, and I'll pay a lawyer 10k, but while it will hurt, I can afford it -- but you've pissed me off royally with that "excessive wear" BS. Dance or walk away.
They dropped it.
A few years later we traded that car .. at a different dealer. Kinda sad as we had been using that dealer for 10 years and might still be as our preferred dealer. I'm willing to spend a few dollars more at a dealer (for anything) I've dealt with before and am trying to make a working relationship with. But when they make it plain a few dollars is worth more to them than an ongoing working relationship, I'm out.
The mileage thing is the biggest ripoff....mileage does not matter to the dealer... they sent any lease returns to auctions , then they end up on some dealers used car lot ... and people buy them regardless of mileage ....
Leasing the most expensive way to operate a vehicle. There is a reason why it’s called auto fleecing. See Dave Ramsey’s channel on YT.
I am in NM. I STILL VALUE YOUR INFORMATION.
I have never had a issue where the finance company later sends a bill for damages, however, when I turn in a lease I video the inspection at the dealer, they have never had an issue with that.
Also back in the day, 2007, I actually got a GMAC lease where if you paid for extra miles and ended up not using them you would get a check back for the miles you didn't use. I don't see that any more.
This is what we did with a Cougar years ago. The one and only lease we had.
Great idea to tape the inspection!
No Tucker model in the background...
I went to the dealer to buy a specific car. I was told I couldn't afford it. They wanted to sell me a economy model. I told them "no I came here for this car" they said...well you can lease it. OK I said. Yes I ran over the miles but when the lease was done I could buy the car. When you combine the lease and the purchase price it worked out to the same as if they sold it to me in the first place. #credit is BS
Why would anyone put money down on a car you are essentially renting. When you go to Hertz or Avis, would you pay $300 for a $600 rental?
Car leases are really not car leases. If you have to pay the insurance, and tag the car, you are getting screwed. To me a lease is a payment lower than one to buy the car, all maintenance and repairs are included, and you are covered on your current insurance on a "rental" vehicle.
Thanks for your knowledge
I have an 11 year old preugot diesel car. 130k miles and still going.
Call leases are a rip off the buyout price is negotiated at the beginning of The lease not at the end when you turn and it in. So you're basically paying for bluebook at the and the end of the lease. if you choose to buy out the lease & own the car.
Not necessarily. I've had some deals offered me to keep the car that were much better than the agreed on price in the contract.
Robert Jensen. Yes, exactly. Sidhnarth Chand: that's actually the benefit of the lease. You want that residual value put in writing at the beginning of the lease.
@@SpeakmanDavid The residual value put into the lease up front is not the same as the actual value of the car at the end, right? The value in the lease is used to calculate how much of the car you are paying for in the lease. (You pay cost of car - residual value + finance costs + taxes and fees.) The lease might guarantee you right of first refusal to buy the car at that residual value, but whether that is a good deal depends on the actual market value of the car at the expiration of the lease. Or am I missing something?
Very great information and great stories. Subscibed.
Steve are lease cars subject to lemon law?
In most states, yes. (So long as they are new. I've been seeing people lease used cars more and more these days.)
He said bit*h! first curse word I had ever herd from Steve Lehto!! lol no complaint just surprised. Love your videos though, I am no lawyer, but excellent presentation, dictation and relevant information for the average Joe.
Did I say it as a verb or did I refer to someone as one?
You didn't mention that a person can sell or transfer a lease arrangement to a second party if you run into difficulties..
How far can a Corporation go, as far as writing something into the contract, does anything go. Like if you go over on the mileage, you must buy, or release the same car. Or would a Judge say, , decision for the Plaintiff , or would they say Sir did you read the contract, and it really dosent matter you signed it. If so Im going to write up a contract to mow my neighbors yard, and in fine print it states. When job is done and you are happy with the work, you will forfeit your house at said location. If that is right, Im getting started writing up some Contracts right away . And its not even a scam, the system will back you up. Thanks Stev, I knew I would find a way. Heck my wife's a Notary just one step away from being a Attorney . Now wheres that neighbor I dont like, Hey Jess have I got a deal for you brother. Trust me just sign. Yea just ignore that fine print, its so small what could it really mean anyway. Steve have you ever heard of a contract attorney named Mack Eaton. Time Line: 60s / 70s / 80s.
How small can the fine print be, thinking microscope maybe, laser etched. Are there rules on this stuff, or is it "gray", like everything else.
Thank You Mrs Weiss
Lease=pay for every nick and scratch....Best way to go is to buy used Toyota or used Honda with pre-purchase inspection...
I have never leased a car but I have taken low or zero interest loans. Loans if the interest iss low great but the dealer will be less interested in giving a good deal than if you pay cash. Those loans from what I understand from my purchases make you pay a little more for the car which is o.k. if you cannot pay cash. In the last 15 years I paid cash and got a better price than if I had a car loan except if I did it with a bank but then I paid more interest to the bank do it is damned if I do damned if I don't. In my opinion (noting that I keep cars along time) leasing increases the cost of the monthly cost per mile. Saying that I am wrong for those that only want to keep a car a few years and change.
Thanks for the info!
Better know as a fleece.
I think that the majority of leases are from irresponsible people that are in a financial situation where they can't afford to buy, or that they are wanting to drive an expensive vehicle they could never afford to buy. I have never met anyone who leased a car that wasn't in some financial situation. It seems like the dealerships use leases to get the people who can't afford the payment on a loan into a car.
Agreed and this speaks to my sister. She's making the mistakes this guy is saying ugh
Most of us are not wealthy, thus we all are in some sort of financial situation.
Just not true. The WORST financial decision you can ever make is 'buying' a new car. There is no good reason to do that ever. A great lease deal has tremendous benefit. For many of the reasons Steve stated. IMO, people are looking at this as an investment. A car is not an investment. It is a depreciating asset. Something you would never want to own (unless it was a classic car or something). It is an expense. And you want to minimize expenses. Paul, you are correct that a big mistake people do make is they shop for a monthly payment and when they realize that they can lease a much more expensive car than they would have purchased, they go for the more expensive car. You've got to understand your budget and decide what car is in your price range. Then decide if leasing works for you. If it doesn't, then go and find that car someplace in they country with 2-5k miles on it and purchase that car. NEVER buy it new. And never pay cash for it. That's ridiculous when new auto loan rates are 2.75% (and they were 1.9%).
I mostly agree with you, but I know of a few financially well off people who just like to trade in cars quicker, and remember your are saving a bit of money because of tax/depreciation
Still not a smart financial move, but buying a new car isn't either, and if they can afford it and is their money, their decision
but yes, mostly is people living above their means
I whole disagree with you. I have done leases for my last 5 vehicles. I don't ever have to worry about a break down because my car is ALWAYS under warranty, every 3 years I get a new car, and going from a lease right into another lease gets you better deals. Never was it because of not being able to afford a new car, I just don't want the hassle of selling my car to buy a new one.
A person needs to take a photos of everything when selling the vehicle or whatever and keep records and dates
Thanks Sir👍
70 years old and never had a car payment but then I'm a car guy who only drives old classic vehicles. Wouldn't own a new car today. They have designed built in failures to occur after warranty period. See Mercedes, BMW. Germans are masters at it.
Suppose you have a lease, like the vehicle or are severely over the allocated mileage, how smart is it to just purchase the vehicle for the residual value?
In my view you are buying a used car but you definitely know the history. I bought an altima once. Both the lease payments and car payments were not unreasonable.
Sure, leases are predictable. You can predict that if you're the average driver*, you'll get taken for a ride. A lease is a way for you to pay the entire cost of the vehicle PLUS an overhead charge and then give it back to the leasing company PLUS an excess mileage charge PLUS whatever repair charges the company thinks they can nail you with. "Read the lease carefully . . ." Or better yet, just tear it up and toss it in the trash.
* who can't deduct lease costs on their 1040.
Expensive luxury cars drop in value like a rock, and they're unreliable and expensive to repair, so you don't want to keep them too long. That makes them possibly a good candidate for a lease, if you can get a good deal. Another good candidate is an EV because the technology is advancing rapidly, and it might be obsolete in a few years.
My wife and I lease a new BMW every 3 years, at least 8 I can think of I don't pay for any maintenance. I have never bought even a set of tires. I am assured she is always safe, and of course, stylish. Cars are NOT an investment. They are an expense with massive depreciation. About the only negative I see is insurance and personal property taxes. I like having a new car every 3 years, and as long as I can afford it, that is what I will do. And it goes from zero to 60 in 5 seconds and gets 30 mpg. Really $500 a month is pretty insignificant considering what you get.
Look how tidy the room used to be lol
Whats the problems of owning a house? Oh i dont know, maybe appreciation?
7:43 Steve said a bad word.
How do you feel about stricken language in a lease - Lets say you dont like a particular clause, can you strike & initial & consider that to be Voided? I assume at that point the lessor who would then have the obligation to halt the transaction... we both know the auto dealer isn't going to stop the transaction as they are making commissions - Would you still be held to the stricken clause?
They would never let you modify the lease.
Steve Lehto so I happen to be a paralegal who handles post repossession recoveries... I can't say I've never seen a contract show up with a particular line not signed or a particular phrase stricken... most commonly in business leases with personal guarantees...
How can you sell a car you have leased? It does not belong to you, right?
Morning Counselor, question on leasing. Pre-paid leasing option is there anything besides personal preference on funds to know about? As in, any hidden clauses that might work for or against either party? Thank you.
+Alex DeLarge none that I'm aware of. Good luck.
There is no financial benefit to pre-paying a lease. You MAY get a better money factor, but it is negligible (unless you have poor credit...then the benefit will be greater). But you are opening yourself up to greater risk. If you were to total that leased vehicle, the insurance company will pay off your obligation and you are free and clear of the lease. But wait a minute, I just spent $12k to have this car for 3 years and now I've got nothing. Yup. If you wanted another one, it would be like starting over and you never got the 'return' out of your $12k expense.
You didn't mentioned about wear and tear policy.
All manufacturers allow for 'normal wear and tear'. You have to have your leased vehicle inspected. You should do it a month before you turn it in. That way if anything needs to be repaired, you can do it before you turn it in. But it is typically things like tires. And if you've been in an accident where there was damage, you would have had an insurance claim and it would have been fixed. In a lot of ways, that benefits you because you are turning in a vehicle that has an accident on its vehicle history. And as long as it was repaired properly, it doesn't hurt you at all. If that were a purchased vehicle and a potential buyer (either private or dealer) did their research and saw it had been in an accident, they would question you on it and no matter how significant, they'd want to offer you less or walk away from it entirely.
David Speakman I pay them extra to use their full coverage insurance 🤔 but yet they still say I have to fix it. Didn’t they get money from the claim for fixing the car? And why would a dent in a front fender mean they can’t fix sensors in the car that they claim is the reason the transmission doesn’t work right 😕 I regret everyday getting that flipping car from express auto I was such a fool 😣
is is true on a lease they do not have to disclose the interest rate as opposed if you were to buy the car on a normal car loan???
The do disclose the interest rate. It is called the money factor.
It is a bit confusing. Essentially the money factor is the interest rate divided by 2,400. For example, an interest rate of 2.9 percent would essentially be a money factor or .001208 (2.9%/2,400).
Conversely, a money factor of .0009 is essentially an interest rate of 2.16 percent (.0009 x 2,400).
The interest on a lease is calculated differently from a purchase. On a lease the interest is calculated as follows. Add the capitalized amount plus the residual amount and multiply by the money factor.
For example, if the capitalized cost is $30,000 and the residual value is $20,000 and the money factor is .0009, the interest payment is $45 a month (($30,000 + $20,000 ) X .0009).
Multiply the money factor by 2400 and that’s your rate.
Question: My Dad has 18 months left on his 2016 Camry through Toyota Financial. It appears he may no longer be able to drive due to health issues. Is there a means to terminate the lease early due to these issues, or is the car going to sit and rot 18 months while he pays the lease each month until the end of the lease? It is now $$ he can ill afford to spend due to these new Medical bills he has.
+Jon Smith you can ask the leasing company but there might not be a way to force them to cooperate.
Put it on one of those lease websites where people look to take over leases.
Yes, most leases are assumable. Toyotas are. You put it on LeaseTrader or Swapalease and have someone assume it.
My best friend leased,a 18 ford explorer because he couldn't afford to buy it. Leases are for suckers
Be smart, buy your neighbors 06 Corolla or Camry waaaay cheaper than a new or leased vehicle
Always buy cars with cash
Yup, I remember a couple years ago, this guy died. They tried to make his wife pay. Not good. After losing his income, how can she be held responsible......another reason of why marriage is a bad idea
i ended up with a $3000 charge for overmiles. I offered to settle for $1000 and they accepted it.
My brother-in-law always leases as he thinks it saves him money. However when he gets to the point where he is close to going over the mileage he simply only uses the car for short rides. Will no longer go on a trip. He is a slave to the lease.
Excellent point!
I know people who say the lease saves them money. And they might be right but not by much. The least expensive way to own a car is to buy it for cash and keep it for fifteen years. But that's only true if the car requires only the scheduled maintenance, your mechanic doesn't rip you off, and you generally have good luck with the car. If all of that falls into place your total cost will be much less than any lease.
leases are for the people that need to have the best and newest of everything.....to each his own but id rather have i big bank account and my retirement funded and drive an older car paid for with cash...you will stay broke handing your paycheck back to the bank...
All you do with a lease is pay someone else to take out a loan on your car.
And keep an eye on the tires! The inspection they do at the end, usually at your home or work - they will measure the tread depth on the tires - I lucked out and had about 1/32 more than I needed to be in compliance! You can't turn it in on bald tires! Also - they will look for door dings and dimples. As Steve points out if you know you're going to deal with the same dealer when you get out of it - you can bend them over and get some flexibility on things - small dings, tires, miles - but you have to be willing to play ball with that dealer again on the 2nd lease or purchase.
Thanks for the info
The GM EV-1 was only available for lease through Saturn dealers. When GM decided to end the program they required immediate return of the vehicles whether you were at the end of your lease term or not. If you were over mileage you were charged for being over and if they was any damage you were charged for repairing the damage even though all of the EV-1s were destroyed by GM to ensure they were never used again. About 40 were saved for museums and research facilities.
I am a CPA and a former corporate fleet manager. I have had hundreds of employees come talk to me about car leasing and I would say that no more than 10% of those people - many of them very educated - have a clue as to what they are really getting into when they lease a car. Before I leased a car, not that I ever would, I would want to now what the buyout amount is UPFRONT and have a provision where I could choose to buy the car. That way, if my conditions change and my mileage goes crazy, I have an upper limit as to what I am going to spend.
You DO get the buyout up front. That's part of the beauty of a lease. The manufacturer is forced to put in writing the future value of the vehicle. This only benefits you. Because they can only be right or wrong. And you have the choice at the end of the lease to just walk away from it, lease another, or purchase it. If the vehicle is worth more then what they said it would be (which has happened to me many times), you then have the ability to buy a great used car that you have had since it was new (so no apprehension as to the cars history) for a great price (under market value), OR, you can actually sell the vehicle, pay off the lease and pocket the difference.
You are a CPA and think you know about leasing yet you state "I would want to know what the buyout is UPFRONT!" Every lease clearly sets out the buyout amount at lease inception. It is called the residual value. Any lease can be bought out at any time. The buyout cost would be the residual value plus any remaining lease payments.
A curious person would think a CPA and former corporate fleet manager would know this stuff.
The reality is the cost of a leased vehicle is the same whether the vehicle is purchased or leased. If you negotiate a car for $30,00 and pay cash, you would pay $30,000. If you leased and the residual value is $18,000, you pay $12,000 during the term of the lease. If you purchase at lease end you pay the $18,000 buy out. So, as with the purchase, you would pay $30,000.
The reality is, while many folks do not understand leasing a vehicle, for those folks who do understand leasing is often the wise choice.
@@jerrylundegaard2592 The residual value put into the lease up front is not the same as the actual value of the car at the end of the lease, right? The value in the lease is used to calculate how much of the car you are paying for in the lease. (You pay cost of car - residual value + finance costs + taxes and fees.) The lease might guarantee you right of first refusal to buy the car at that residual value, but whether that is a good deal depends on the actual market value of the car at the expiration of the lease. Or am I missing something?
@@n124lp You are correct. The residual value is an estimate made by the leasing company. The RV is not always the expected value at the end of the lease. In some cases, a leasing company (usually the OEM) may set a high residual value to increase the number of leases.
I’ve noticed that a lot of your videos have exactly 6 dislikes. I have a suspicion that it’s the same 6 trolls going around and disliking your videos....
Probably people I've blocked from commenting.
Dude! Disliking this guy's videos is a crime against nature! How can anybody do that?
It sounds like car and leasing companies are a ripoff and you should avoid them like the plague.
That is wrong. A car lease may be a good way to finance a vehicle. It depends on the person and the person's knowledge about how to lease.
Leasing is best for higher value vehicles.
A car lease is usually a bad deal for people who do not understand how to lease and how to compute a lease payment.